Recent statistics are a stumbling block for President Joe Biden.
NEW YORK / OSLO (Nettavisen): Several recent figures published in the US on Friday are a downturn for President Biden.
– A huge disappointment
First, recent employment figures in the United States in August were far worse than expected.
Figures from US statistical authorities on Friday show that non-farm employment – non-farm payrolls – increased by only 235,000 people in August. Unemployment in the United States at the end of the month was 5.2 percent.
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– A huge disappointment, writes CNN about the fresh numbers.
The number also disappoints on Wall Street, and both the Dow Jones and S&P 500 started down.
Biden is furious at the poll
A recent poll from ABC News/Washington Post which was published on Friday, also shows that those who think President Joe Biden is doing a good job are now down to 44 percent, down from 52 percent in April.
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Those who think Biden is doing a bad job are now up to 51 percent, up from 42 percent in April this year.
500,000 fewer
So far this year, the average job growth outside the agricultural sector has been 586,000. The growth has primarily come in the academic professions, transport and warehousing, but also in private education, production and other service industries.
In other words, the rise has been wide. In August, there was a decline in trade in goods.
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According to Handelsbanken, total employment was expected to rise by 750,000, after a growth of a whopping 943,000 in July. The unemployment rate was forecast to fall to 5.2 per cent, marginally down from 5.3 per cent in July. This prediction came true.
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The bank wrote this morning that even if the forecast is correct, there will still be just over 5 million fewer employees in the US than before the corona pandemic. At the end of August, about 8.4 million Americans were unemployed.
Not surprisingly, there is a significant decline in unemployment from peak levels in the spring of 2020, but unemployment before the corona was at 3.5 percent and 5.7 million Americans without a job. A so-called neutral unemployment, an unemployment that does not create wage and price pressure in the economy, is estimated at around 4 per cent.
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The most important in the world
The US employment figures are often referred to as “the world’s most important key figures”.
In the morning report on Friday, DNB Markets is content to refer to them as «the most important key figures of the month». And they then ask the inevitable question: Why is this particular figure so important for the financial markets?
The obvious explanation, according to the brokerage, is that the US labor market means a lot to the US Federal Reserve and monetary policy. This applies to both in the form of securities purchases and the key policy rate.
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Right now, the figures are extremely important, according to DNB. The central bank has said that a significant improvement in the labor market will mean that purchases of securities can be scaled down. During the corona crisis, the Federal Reserve bought a lot of securities to keep interest rates down and liquidity in the market up.
Stands and falls
The downsizing of these purchases stands and falls with the development in the labor market. DNB wrote in the morning that if today’s report is as good as expectations indicate (they use 725,000 new jobs, editor’s note), the downsizing of purchases can start later this year.
The brokerage believes it will happen in November or December, and that there will be a reduction over eight months.
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